the SMART GRID: an introduction.

Exploring the imperative of revitalizing America’s electric infrastructure.

How a smarter grid works as an enabling engine for our economy, our environment and our future.

prepared for the U.S. Department of Energy by Litos Strategic Communication under contract No. DE-AC26-04NT41817, Subtask 560.01.04

the SMART GRID: an introduction.

the SMART GRID: an introduction.

DISCLAIMER

This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government

nor any agency thereof, nor Litos Strategic Communication, nor any of their employees, make any warranty, express or implied, or assumes any

legal liability or responsibility for the accuracy, completeness, or usefulness of any information apparatus, product, or process disclosed, or

represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade

name, trademark, manufacturer or otherwise does not necessarily constitute or imply its endorsement, recommendation or favoring by the

United States Government or any agency thereof, or Litos Strategic Communication. The views and opinions of authors expressed herein do not

necessarily state or reflect those of the United States Government or any agency thereof.

PRINTED IN THE UNITED STATES OF AMERICA.

From the Department of Energy

The Smart Grid Introduction is intended primarily to

acquaint non-technical yet interested readers about:

•theexistenceof,andbenefitsaccruing

from,asmarterelectricalgrid

•whattheapplicationofsuchintelligence

means for our country

•howDOEisinvolvedinhelpingtoaccelerate

its implementation.

PREFACE

It Is A ColossAl tAsk. But It Is A tAsk thAt must BE donE.

TheDepartmentofEnergyhasbeenchargedwithorchestratingthewholesale

modernization of our nation’s electrical grid.

While it is running.

Full-tilt.

HeadingthiseffortistheOfficeofElectricityDeliveryandEnergyReliability.In

concertwithitscuttingedgeresearchandenergypolicyprograms,theoffice’snewly

formed,multi-agencySmartGridTaskForceisresponsibleforcoordinatingstandards

development,guidingresearchanddevelopmentprojects,andreconcilingtheagendas

of a wide range of stakeholders.

Equally critical to the success of this effort is the education of all interested members

ofthepublicastothenature,challengesandopportunitiessurroundingtheSmart

Grid and its implementation.

It is to this mission that The Smart Grid: An Introduction is dedicated.

TOC

K N O W L E D G E B R O U G H TT O P O W E R

TWO Edison vs. Graham Bell: The Case for Revitalization.

Presenting the argument in a timely fashion requires a trip “back to the future…”

SECTION

Resources and Glossary

Coming to terms with the Smart Grid...

ONE Introduction: We Don’t Have Much Time.

Toward an orderly transition to a smarter grid…

FOUND ON

SEVEN How Things Work: Creating the Platform for the Smart Grid.

Making it possible for consumers to participate…

NINE Edison Unbound: What’s Your Stake in All This?

Benefits for everyone…

FIVE Compare and Contrast: A Grid Where Everything is Possible.

For an invigorating vision of our energy future, look forward…

SIX First Things First: Teasing Out the Complexities.

How various constituencies – i.e., utilities and regulators – are working toward fundamental realignment to make a smarter grid get here faster…

FOUR The Smart Grid: What It Is. What It Isn’t.

Why it’s important to know the difference…

THREE The Grid as It Stands: What’s at Risk?

The many hazards associated with operating the 20th century grid in the 21st century. The lights may be on, but consider what we’re missing…

EIGHT Progress Now!: A Look at Current Smart Grid Efforts and How They’re Succeeding.

From West Virginia to California to Hawaii, a smarter grid is taking shape…

TOPICS

TOC

K N O W L E D G E B R O U G H TT O P O W E R

TWO Edison vs. Graham Bell: The Case for Revitalization.

Presenting the argument in a timely fashion requires a trip “back to the future…”

SECTION

Resources and Glossary

Coming to terms with the Smart Grid...

ONE Introduction: We Don’t Have Much Time.

Toward an orderly transition to a smarter grid…

FOUND ON

SEVEN How Things Work: Creating the Platform for the Smart Grid.

Making it possible for consumers to participate…

NINE Edison Unbound: What’s Your Stake in All This?

Benefits for everyone…

FIVE Compare and Contrast: A Grid Where Everything is Possible.

For an invigorating vision of our energy future, look forward…

SIX First Things First: Teasing Out the Complexities.

How various constituencies – i.e., utilities and regulators – are working toward fundamental realignment to make a smarter grid get here faster…

FOUR The Smart Grid: What It Is. What It Isn’t.

Why it’s important to know the difference…

THREE The Grid as It Stands: What’s at Risk?

The many hazards associated with operating the 20th century grid in the 21st century. The lights may be on, but consider what we’re missing…

EIGHT Progress Now!: A Look at Current Smart Grid Efforts and How They’re Succeeding.

From West Virginia to California to Hawaii, a smarter grid is taking shape…

TOPICS

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6

10

16

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28

32

36

40

Our nation’s electric power infrastructure that has served us so well for so long – also known as “the grid” –

is rapidly running up against its limitations. Our lights may be on, but systemically, the risks associated with

relying on an often overtaxed grid grow in size, scale and complexity every day. From national challenges like

power system security to those global in nature such as climate change, our near-term agenda is formidable.

Some might even say history-making.

Fortunately, we have a way forward.

Thereisgrowingagreementamongfederalandstatepolicymakers,business

leaders,andotherkeystakeholders,aroundtheideathataSmartGridisnotonly

needed but well within reach. Think of the Smart Grid as the internet brought to

our electric system.

A tale of two timelines

There are in fact two grids to keep in mind as our future rapidly becomes the present.

The first – we’ll call it “a smarter grid” – offers valuable technologies that can be deployed within the very near future

or are already deployed today.

The second – the Smart Grid of our title – represents the longer-term promise of a grid remarkable in its intelligence

andimpressiveinitsscope,althoughitisuniversallyconsideredtobeadecadeormorefromrealization.Yetgivenhow

asingle“killerapplication”–e-mail–incitedbroad,deepandimmediateacceptanceoftheinternet,whoistosaythat

a similar killer app in this space won’t substantially accelerate that timetable?

Intheshortterm,asmartergridwillfunctionmoreefficiently,enablingittodeliverthelevelofservicewe’vecometo

expectmoreaffordablyinaneraofrisingcosts,whilealsoofferingconsiderablesocietalbenefits–suchaslessimpact

on our environment.

Longerterm,expecttheSmartGridtospurthekindoftransformationthattheinternethasalreadybroughttothe

waywelive,work,playandlearn.

Section one :

IntRoduCtIon

WE don’t hAvE muCh tImE.

2

A smarter grid applies technologies, tools and techniques available now to bring knowledge to power –

knowledge capable of making the grid work far more efficiently...

•Ensuringitsreliabilitytodegreesneverbeforepossible.

•Maintainingitsaffordability.

•Reinforcingourglobalcompetitiveness.

•Fullyaccommodatingrenewableandtraditionalenergysources.

•Potentiallyreducingourcarbonfootprint.

•Introducingadvancementsandefficienciesyettobeenvisioned.

Transformingournation’sgridhasbeencomparedinsignificancewithbuildingtheinterstatehighwaysystem

orthedevelopmentoftheinternet.Theseefforts,rightlyregardedasrevolutionary,wereprecededbycountless

evolutionarysteps.Envisionedinthe1950s,theEisenhowerHighwaySystemwasnotcompleteduntiltheearly

1980s.Similarly,theinternet’slineagecanbedirectlytracedtotheAdvancedResearchProjectsAgencyNetwork

(ARPANET)oftheU.S.DepartmentofDefenseinthe60sand70s,longbeforeitsappearanceasasociety-changing

technology in the 80s and 90s.

Inmuchthesameway,fullimplementationoftheSmartGridwillevolveovertime.However,countlesspositive

stepsarebeingtakentoday,organizationsenergizedandachievementsrealizedtowardreachingthatgoal.You

will learn about some of them here.

Thepurposeofthisbookistogivereaders–inplainlanguage–afixonthecurrentpositionoftheSmartGridand

itsadoption.YouwilllearnwhattheSmartGridis–andwhatitisnot.Youwillgetafeelfortheissuessurrounding

it,thechallengesahead,thecountlessopportunitiesitpresentsandthebenefitsweallstandtogain.

Rememberlifebeforee-mail?

Witheverypassingday,fewerandfewerpeopledo.

Withtheappropriateapplicationofingeniousideas,advancedtechnology,entrepreneurialenergyandpoliticalwill,

there will also come a time when you won’t remember life before the Smart Grid.

3

The story goes like this:

If Alexander Graham Bell were somehow transported

tothe21stcentury,hewouldnotbegintorecognize

thecomponentsofmoderntelephony–cellphones,

texting,celltowers,PDAs,etc.–whileThomasEdison,

oneofthegrid’skeyearlyarchitects,wouldbetotally

familiar with the grid.

Section tWo:

ediSon vS. GRAHAM Bell:thE CAsE FoR REvItAlIZAtIon.

There is a popular comparison that

underscores the pace of change – or lack

thereof – regarding our nation’s grid.

Menlo Park Workshop Pearl Street Station First Street Lamps Metering Compact Fluorescent Light

4

advancements in electricity

advancements in telecommunications

Operator Switching Stations Rotary Dialing North American Numbering System

Rotary Dial with Ringerand Handset

First Telephone

While this thought experiment speaks volumes about

appearances,itisfarfromthewholestory.Edisonwouldbequite

familiar with the grid’s basic infrastructure and perhaps even an

electromechanicalconnectionortwo,buthewouldbejustas

dazzled as Graham Bell with the technology behind the scenes.

Ourcentury-oldpowergridisthelargestinterconnected

machineonEarth,somassivelycomplexandinextricablylinked

to human involvement and endeavor that it has alternately (and

appropriately)beencalledanecosystem.Itconsistsofmore

than9,200electricgeneratingunitswithmorethan1,000,000

megawatts of generating capacity connected to more than

300,000milesoftransmissionlines.

Incelebratingthebeginningofthe21stcentury,theNational

Academy of Engineering set about identifying the single most

important engineering achievement of the 20th century. The

Academy compiled an estimable list of twenty accomplishments

which have affected virtually everyone in the developed world.

Theinternettookthirteenthplaceonthislist,and“highways”

eleventh.Sittingatthetopofthelistwaselectrificationas

madepossiblebythegrid,“themostsignificantengineering

achievement of the 20th Century.”

Given that the growth of the nation’s global economic leadership

overthepastcenturyhasinmanywaysmirroredthetrajectory

ofthegrid’sdevelopment,thischoiceisnotsurprising.

Inmanyways,thepresentgridworksexceptionallywellfor

whatitwasdesignedtodo–forexample,keepingcostsdown.

Becauseelectricityhastobeusedthemomentitisgenerated,

thegridrepresentstheultimateinjust-in-timeproductdelivery.

Everything must work almost perfectly at all times – and does.

Wheneveranoutageoccursin,say,Florida,theremaywellbe

repercussionsuptheAtlanticseaboard;however,duetothe

system’srobustnessandresultantreliability,veryfewoutside

the industry ever know about it.

Engineered and operated by dedicated professionals over

decades,thegridremainsournationalengine.Itcontinuesto

offer us among the highest levels of reliability in the world for

electricpower.Itsimportancetooureconomy,ournational

security,andtothelivesofthehundredsofmillionsitserves

cannot be overstated.

But we – all of us – have taken this marvelous machine for

grantedforfartoolong.Asaresult,ouroverburdenedgrid

has begun to fail us more frequently and presents us with

substantial risks.

POWER SYSTEM FACT

Today’s electricity system is 99.97

percent reliable, yet still allows for

power outages and interruptions that cost

Americans at least $150 billion each

year — about $500 for every man,

woman and child.

5Long Distance Calling First Telecom Satellite Touch-Tone Telephones Cellular Communications Phone Over the Internet

tHe GRid AS it StAndS: WhAt’s At RIsk?

Since 1982, growth in peak demand for electricity –

driven by population growth, bigger houses, bigger

TVs, more air conditioners and more computers

– has exceeded transmission growth by almost

25% every year. Yet spending on research and

development – the first step toward innovation

and renewal – is among the lowest of all industries.

Evenasdemandhasskyrocketed,therehasbeen

chronic underinvestment in getting energy where it

needstogothroughtransmissionanddistribution,

furtherlimitinggridefficiencyandreliability.While

hundreds of thousands of high-voltage transmission

linescoursethroughouttheUnitedStates,only668

additional miles of interstate transmission have been

builtsince2000.Asaresult,systemconstraints

worsen at a time when outages and power quality

issues are estimated to cost American business more

than $100 billion on average each year.

In short, the grid is struggling to keep up.

Section tHRee:

6

0% 4% 8% 12%

R&D as a % of Revenue

PERCENTAGE of REVENUE

Energy &Managment

Services

Office Mech

Healthcare

Durable Goods

Aircraft & Missiles

Retail

Stone, Clay & Glass

Printing

Agriculture

Electric Utilities Less than 2%

Based on 20TH century design requirements and having matured

in an era when expanding the grid was the only option and

visibilitywithinthesystemwaslimited,thegridhashistorically

hadasinglemission,i.e.,keepingthelightson.Asforother

modern concerns…

Energy efficiency? A marginal consideration at best when

energy was – as the saying went – “too cheap to meter.”

Environmental impacts? Simply not a primary concern when

the existing grid was designed.

Customer choice? What was that?

Today,theironyisprofound:Inasocietywheretechnology

reignssupreme,Americaisrelyingonacentrallyplannedand

controlled infrastructure created largely before the age of

microprocessors that limits our flexibility and puts us at risk

on several critical fronts:

EFFICIENCY:Ifthegridwerejust5%moreefficient,theenergy

savings would equate to permanently eliminating the fuel and

greenhousegasemissionsfrom53millioncars.Considerthis,

too:IfeveryAmericanhouseholdreplacedjustoneincandescent

bulb(Edison’sprideandjoy)withacompactfluorescentbulb,the

country would conserve enough energy to light 3 million homes

andsavemorethan$600millionannually.Clearly,thereare

terrificopportunitiesforimprovement.

RELIABILITY:Therehavebeenfivemassiveblackoutsover

thepast40years,threeofwhichhaveoccurredinthepast

nineyears.Moreblackoutsandbrownoutsareoccurring

duetotheslowresponsetimesofmechanicalswitches,a

lackofautomatedanalytics,and“poorvisibility”–a“lackof

situational awareness” on the part of grid operators. This issue

of blackouts has far broader implications than simply waiting

forthelightstocomeon.Imagineplantproductionstopped,

perishablefoodspoiling,trafficlightsdark,andcreditcard

transactions rendered inoperable. Such are the effects of even

a short regional blackout.

did you know

InmanyareasoftheUnitedStates,the

only way a utility knows there’s an outage

is when a customer calls to report it.

7

POWER SYSTEM FACT

41% more outages affected 50,000

or more consumers in the second half of

the 1990s than in the first half of the decade.

The “average” outage affected 15 percent

more consumers from 1996 to 2000

than from 1991 to 1995 (409,854

versus 355,204).

NATIONAL ECONOMY: The numbers are staggering and speak

for themselves:

•ArollingblackoutacrossSiliconValleytotaled$75

million in losses.

•In2000,theone-houroutagethathittheChicago

Board of Trade resulted in $20 trillion in trades delayed.

•SunMicrosystemsestimatesthatablackoutcosts

the company $1 million every minute.

•TheNortheastblackoutof2003resultedina$6

billion economic loss to the region.

Compounding the problem is an economy relentlessly grown digital. In

the1980s,electricalloadfromsensitiveelectronicequipment,suchas

chips(computerizedsystems,appliancesandequipment)andautomated

manufacturingwaslimited.Inthe1990s,chipsharegrewtoroughly10%.

Today,loadfromchiptechnologiesandautomatedmanufacturinghasrisen

to40%,andtheloadisexpectedtoincreasetomorethan60%by2015.

AFFORDABILITY:Asratecapscomeoffinstateafterstate,thecostof

electricityhasdoubledormoreinrealterms.Lessvisiblebutjustasharmful,

thecostsassociatedwithanunderperforminggridarebornebyeverycitizen,

yet these hundreds of billions of dollars are buried in the economy and largely

unreported.Risingfuelcosts–mademoreacutebyutilities’expiringlong-

term coal contracts – are certain to raise their visibility.

Section tHRee : CONTINUED

thE gRId As It stAnds: WhAt’s At RIsk?

resource recovery

Dollarsthatremaininthe

economy rather than “paying the

freight”forsysteminefficiency

are dollars that society can put

togooduseforjobcreation,

healthcare,andhomelandsecurity.

8

‘ 75 ’80 ‘85 ’90 ‘95 ’00

Decrease in Transmission Investment (Dollar Amount In Billions)

YEARS

$1

$2

$3

$4

$5

$6

- 117 million

SECURITY:Whentheblackoutof2003occurred–thelargestinUShistory–

thosecitizensnotstartledbybeingstuckindarkened,suffocatingelevators

turned their thoughts toward terrorism. And not without cause. The grid’s

centralizedstructureleavesusopentoattack.Infact,theinterdependencies

of various grid components can bring about a domino effect – a cascading series

offailuresthatcouldbringournation’sbanking,communications,traffic,and

security systems among others to a complete standstill.

ENVIRONMENT/CLIMATE CHANGE:Fromfoodsafetytopersonalhealth,a

compromisedenvironmentthreatensusall.TheUnitedStatesaccountsforonly

4%oftheworld’spopulationandproduces25%ofitsgreenhousegases.Halfof

ourcountry’selectricityisstillproducedbyburningcoal,arichdomesticresource

butamajorcontributortoglobalwarming.Ifwearetoreduceourcarbonfootprint

andstakeaclaimtoglobalenvironmentalleadership,clean,renewablesourcesof

energylikesolar,windandgeothermalmustbeintegratedintothenation’sgrid.

However,withoutappropriateenablingtechnologieslinkingthemtothegrid,

their potential will not be fully realized.

GLOBAL COMPETITIVENESS: Germany is leading the world in the development

and implementation of photo-voltaic solar power. Japan has similarly moved to

the forefront of distribution automation through its use of advanced battery-

storagetechnology.TheEuropeanUnionhasanevenmoreaggressive“Smart

Grids”agenda,amajorcomponentofwhichhasbuildingsfunctioningaspower

plants.Generally,however,thesecountriesdon’thavea“legacysystem”onthe

order of the grid to consider or grapple with.

How will a smarter grid address these risks and others? Read on.

9

The U.S. accounts for 4% of the world’s population while contributing25% of its greenhouse gases.

U.S. Share of World Population Compared to its Production of Greenhouse Gases

4%

25%

Centralized System of the mid 1980’s More Decentralized System of Today

Large CHP (Combined Heat & Power)Wind

Small CHP (Combined Heat & Power)

DENMARK’s PROGRESS OVER THE PAST TWO DECADES

The electric industry is poised to make the transformation

fromacentralized,producer-controllednetworktoonethat

is less centralized and more consumer-interactive. The move

to a smarter grid promises to change the industry’s entire

businessmodelanditsrelationshipwithallstakeholders,

involvingandaffectingutilities,regulators,energyservice

providers,technologyandautomationvendorsandall

consumers of electric power.

tHe SMARt GRid: WhAt It Is. WhAt It Isn’t.

part 1: what it is.

Prepare for an electric system that is

cleaner and more efficient, reliable,

resilient and responsive –

a smarter grid.

Section FoUR :

10

A smarter grid makes this transformation possible by bringing

thephilosophies,conceptsandtechnologiesthatenabledthe

internettotheutilityandtheelectricgrid.Moreimportantly,

it enables the industry’s best ideas for grid modernization to

achieve their full potential.

Concepts in action.

It may surprise you to know that many of these ideas are already

inoperation.Yetitisonlywhentheyareempoweredbymeansof

the two-way digital communication and plug-and-play capabilities

that exemplify a smarter grid that genuine breakthroughs begin

to multiply.

Advanced Metering Infrastructure (AMI) is an approach to

integrating consumers based upon the development of open

standards. It provides consumers with the ability to use electricity

moreefficientlyandprovidesutilitieswiththeabilitytodetect

problemsontheirsystemsandoperatethemmoreefficiently.

AMIenablesconsumer-friendlyefficiencyconceptslike“Pricesto

Devices”toworklikethis:Assumingthatenergyispricedonwhat

it costs in near real-time – a Smart Grid imperative – price signals

are relayed to “smart” home controllers or end-consumer devices

likethermostats,washer/dryersandrefrigerators–thehome’s

majorenergy-users.Thedevices,inturn,processtheinformation

based on consumers’ learned wishes and power accordingly. The

houseorofficerespondstotheoccupants,ratherthanvice-versa.

Becausethisinteractionoccurslargely“inthebackground,”with

minimalhumanintervention,there’sadramaticsavingsonenergy

that would otherwise be consumed.

Thistypeofprogramhasbeentriedinthepast,butwithoutSmart

Gridtoolssuchasenablingtechnologies,interoperabilitybased

onstandards,andlow-costcommunicationandelectronics,it

possessed none of the potential that it does today.

Visualization technology. Consider grid visualization and the

tools associated with it. Already used for real-time load monitoring

andload-growthplanningattheutilitylevel,suchtoolsgenerally

lack the ability to integrate information from a variety of sources

or display different views to different users. The result: Limited

situational awareness. This condition will grow even more acute

ascustomer-focusedefficiencyanddemand-responseprograms

increase,requiringsignificantlymoredataaswellastheability

to understand and act on that data.

Next-generationvisualizationisonitsway.Ofparticularnoteis

VERDE,aprojectindevelopmentforDOEattheOakRidgeNational

Laboratory.VERDE(VisualizingEnergyResourcesDynamicallyon

Earth)willprovidewide-areagridawareness,integratingreal-

timesensordata,weatherinformationandgridmodelingwith

geographicalinformation.Potentially,itwillbeabletoexplorethe

state of the grid at the national level and switch within seconds

toexplorespecificdetailsatthestreetlevel.Itwillproviderapid

information about blackouts and power quality as well as insights

into system operation for utilities. With a platform built on Google

Earth,itcanalsotakeadvantageofcontentgeneratedbyGoogle

Earth’s user community.

POWER SYSTEM FACT

11

INDUSTRY AMOUNT

Cellular communications $41,000

Telephone ticket sales $72,000

Airline reservation system $90,000

Semiconductor manufacturer $2,000,000

Credit card operation $2,580,000

Brokerage operation $6,480,000

AVERAGE COST FOR 1 HOUR OF POWER INTERRUPTION

Phasor Measurement Units.

Popularlyreferredtoasthepowersystem’s“healthmeter,”Phasor

MeasurementUnits(PMU)samplevoltageandcurrentmanytimes

asecondatagivenlocation,providingan“MRI”ofthepowersystem

comparedtothe“X-Ray”qualityavailablefromearlierSupervisoryControl

andDataAcquisition(SCADA)technology.Offeringwide-areasituational

awareness,phasorsworktoeasecongestionandbottlenecksandmitigate

– or even prevent – blackouts.

Typically,measurementsaretakenonceevery2or4secondsofferinga

steady state view into the power system behavior. Equipped with Smart

Gridcommunicationstechnologies,measurementstakenareprecisely

time-synchronizedandtakenmanytimesasecond(i.e.,30samples/second)

offering dynamic visibility into the power system.

Adoption of the Smart Grid will enhance every facet of the electric delivery

system,includinggeneration,transmission,distributionandconsumption.

It will energize those utility initiatives that encourage consumers to modify

patternsofelectricityusage,includingthetimingandlevelofelectricity

demand.Itwillincreasethepossibilitiesofdistributedgeneration,bringing

generation closer to those it serves (think: solar panels on your roof rather

thansomedistantpowerstation).Theshorterthedistancefromgeneration

toconsumption,themoreefficient,economicaland“green”itmaybe.Itwill

empower consumers to become active participants in their energy choices

to a degree never before possible. And it will offer a two-way visibility and

control of energy usage.

Section FoUR : CONTINUED

thE smARt gRId: WhAt It Is. WhAt It Isn’t.

smart definition: distributed generation

Distributedgenerationistheuseofsmall-scalepowergenerationtechnologies

locatedclosetotheloadbeingserved,capableofloweringcosts,improving

reliability,reducingemissionsandexpandingenergyoptions.

Just who’s running the grid?

FormedattherecommendationoftheFederal

EnergyRegulatoryCommission(FERC),an

IndependentSystemOperator(ISO)orRegional

TransmissionOrganization(RTO)isaprofit-

neutral organization in charge of reconciling

supplyanddemandasitcoordinates,controls

and monitors the operation of the power

system.TheISO’scontrolareacanencompass

one state or several.

Theroleoftheseorganizationsissignificant

inmakingtheSmartGridreal.ISOsandRTOs

will use the smart distribution system as

another resource for managing a secure and

most economic transmission system. “Lessons

learned” from their experiences in building

processesandtechnologies,etc.,willbedirectly

applicabletoeffortsingridtransformation,

both short-term and long-term.

12

Anautomated,widelydistributedenergydeliverynetwork,the

Smart Grid will be characterized by a two-way flow of electricity

and information and will be capable of monitoring everything from

power plants to customer preferences to individual appliances.

Itincorporatesintothegridthebenefitsofdistributedcomputing

and communications to deliver real-time information and enable

the near-instantaneous balance of supply and demand at the

device level.

The problem with peak.

While supply and demand is a bedrock concept in virtually all

otherindustries,itisonewithwhichthecurrentgridstruggles

mightilybecause,asnoted,electricitymustbeconsumedthe

moment it’s generated.

Withoutbeingabletoascertaindemandprecisely,atagiventime,

having the ‘right’ supply available to deal with every contingency

is problematic at best. This is particularly true during episodes of

peakdemand,thosetimesofgreatestneedforelectricityduring

a particular period.

320

240

160

80

0

0 6 12 18 24

Demand Profile

KIL

OW

AT

TS

HOURS of the DAY

13

Imagine that it is a blisteringly hot summer afternoon. With countless commercial

andresidentialairconditionerscyclinguptomaximum,demandforelectricityisbeing

drivensubstantiallyhigher,toits“peak.”Withoutagreaterabilitytoanticipate,without

knowing preciselywhendemandwillpeakorhowhighitwillgo,gridoperatorsand

utilities must bring generation assets called peaker plants online to ensure reliability and

meetpeakdemand.Sometimesolderandalwaysdifficulttosite,peakersareexpensive

tooperate–requiringfuelboughtonthemorevolatile“spot”market.Butoldornot,

additionalpeakersgenerateadditionalgreenhousegases,degradingtheregion’sair

quality.Compoundingtheinefficiencyofthisscenarioisthefactthatpeakerplantsare

generation assets that typically sit idle for most of the year without generating revenue

but must be paid for nevertheless.

Inmakingreal-timegridresponseareality,asmartergridmakesitpossibletoreducethe

high cost of meeting peak demand. It gives grid operators far greater visibility into the

systematafiner“granularity,”enablingthemtocontrolloadsinawaythatminimizes

theneedfortraditionalpeakcapacity.Inadditiontodrivingdowncosts,itmayeven

eliminate the need to use existing peaker plants or build new ones – to save everyone

money and give our planet a breather.

part 2: what thesmart grid isn’t.

PeopleareoftenconfusedbythetermsSmartGridandsmartmeters.Aretheynotthe

samething?Notexactly.Meteringisjustoneofhundredsofpossibleapplicationsthat

constitute the Smart Grid; a smart meter is a good example of an enabling technology

that makes it possible to extract value from two-way communication in support of

distributed technologies and consumer participation.

As much as “smart

technologies” can enhance this

familiar device, it’s not the same

thing as the Smart Grid.

Section FoUR : CONTINUED

tHe GRid todAy: WhAt It Is. WhAt It Isn’t.

14

Enabling nationwide use of plug-in hybrid electric vehicles…

illustrating the opportunities: the smart grid as enabling engine.

SMART GRID

Asoneindustryexpertexplainsit,thereisnosilverbulletwhenitcomesto

enablingtechnologiesforasmartergrid;thereisinstead“silverbuckshot,”

an array of technological approaches that will make it work.

Furtherclarification:Devicessuchaswindturbines,plug-inhybridelectric

vehiclesandsolararraysarenotpartoftheSmartGrid.Rather,theSmart

Gridencompassesthetechnologythatenablesustointegrate,interface

with and intelligently control these innovations and others.

The ultimate success of the Smart Grid depends on the effectiveness of

these devices in attracting and motivating large numbers of consumers.

Making large-scale energy storage a reality…

Making use of solar energy – 24 hours a day…

Allowing the seamless integration of renewable energy sources like wind…

Ushering in a new era of consumer choice…

Exploiting the use of green building standards to help “lighten the load...”

15

coMpARe And contRASt: A gRId WhERE EvERythIng Is PossIBlE.

The Smart Grid transforms the current grid

to one that functions more cooperatively,

responsively and organically.

SMART GRID FACT

Made possible by a smarter grid, DOE’s

Solar Energy Grid Integration Systems

(SEGIS) is a suite of tools, techniques and

technologies designed to achieve a

high penetration of photovoltaic

(PV) systems into homes

and businesses.

Section Five:

16

Applied across various key constituencies, the benefits of creating a smarter grid are drawn in even sharper relief.

The Smart Grid as it applies to utilities.

Whetherthey’reinvestor-owned,cooperativelyownedor

public,utilitiesarededicatedtoprovidingforthepublicgood

–i.e.,takingcareofsociety’selectricityneeds–byoperating,

maintaining and building additional electric infrastructure. The

costs associated with such tasks can run to billions of dollars

annually and the challenges associated with them are enormous.

Forasmartergridtobenefitsociety,itmustreduceutilities’

capitaland/oroperatingexpensestoday–orreducecostsinthe

future. It is estimated that Smart Grid enhancements will ease

congestionandincreaseutilization(offullcapacity),sending50%

to300%moreelectricitythroughexistingenergycorridors.

The more efficient their systems, the less utilities need to spend.

Given our nation’s population growth and the exponential

increase in the number of power-hungry digital components in

ourdigitaleconomy,additionalinfrastructuremustbebuilt–

Smartornot.AccordingtoTheBrattleGroup,investmenttotaling

approximately $1.5 trillion will be required between 2010 and

2030 to pay for this infrastructure. The Smart Grid holds the

potential to be the most affordable alternative to “building out”

bybuildingless,andsavingmoreenergy.Itwillclearlyrequire

investments that are not typical for utilities. But the overall

benefitsofsucheffortswilloutweighthecosts,assomeutilities

are already discovering.

17

Intelligent – capable of sensing system overloads and

rerouting power to prevent or minimize a potential outage;

of working autonomously when conditions require resolution

faster than humans can respond…and cooperatively in aligning

thegoalsofutilities,consumersandregulators

Efficient – capable of meeting increased consumer demand without

adding infrastructure

Accommodating – accepting energy from virtually any fuel source including

solar and wind as easily and transparently as coal and natural gas; capable of

integratinganyandallbetterideasandtechnologies–energystoragetechnologies,

for example – as they are market-proven and ready to come online

Motivating – enabling real-time communication between the consumer and utility so

consumerscantailortheirenergyconsumptionbasedonindividualpreferences,likeprice

and/orenvironmentalconcerns

Opportunistic – creating new opportunities and markets by means of its ability to capitalize on

plug-and-play innovation wherever and whenever appropriate

Quality-focused–capableofdeliveringthepowerqualitynecessary–freeofsags,spikes,disturbances

andinterruptions–topowerourincreasinglydigitaleconomyandthedatacenters,computersand

electronics necessary to make it run

Resilient – increasingly resistant to attack and natural disasters as it becomes more decentralized and reinforced

with Smart Grid security protocols

“Green”–slowingtheadvanceofglobalclimatechangeandofferingagenuinepathtowardsignificant

environmental improvement

In tERms oF ovERAll vIsIon, thE smARt gRId Is:

One afternoon in early 2008, the wind stopped blowing in Texas.

Aleaderinthisrenewableenergy,thestateexperiencedasudden,unanticipated

anddramaticdropinwindpower–1300Mwinjustthreehours.Anemergency

demand response program was initiated in which large industrial and commercial

usersrestoredmostofthelostgenerationwithintenminutes,actingasabuffer

for fluctuations in this intermittent resource. Smart Grid principles in action.

The Smart Grid as it applies to consumers.

Formostconsumers,energyhaslongbeenconsideredapassivepurchase.

Afterall,whatchoicehavetheybeengiven?Thetypicalelectricbillislargely

unintelligible to consumers and delivered days after the consumption actually

occurs – giving consumers no visibility into decisions they could be making

regarding their energy consumption.

However,itpaystolookatelectricbillscloselyiffornootherreasonthanthis;

they also typically include a hefty “mortgage payment” to pay for the infrastructure

needed to generate and deliver power to consumers.

Asurprisinglysubstantialportionofyourelectricbill–between33%–50%–is

currentlyassignedtofundingour“infrastructuremortgage,”ourcurrentelectric

infrastructure. This item is non-negotiable because that infrastructure – power

plants,transmissionlines,andeverythingelsethatconnectsthem–mustbe

maintainedtokeepthegridrunningasreliablyasitdoes.Infact,thetransmission

anddistributionchargeontheelectricbillisspecificallyforinfrastructure.

Withdemandestimatedtodoubleby2050–andmorepowerplants,transmission

lines,transformersandsubstationstobebuilt–thecostsofthis“bigiron”willalso

show up on your bill in one way or another. (The only difference this time is that

globaldemandfortheiron,steel,andconcreterequiredtobuildthisinfrastructure

willmakethesecommoditiesfarmorecostly;infact,thecostofmanyrawmaterials

andgridcomponentshasmorethantripledsince2006.)

smart definition: real-time pricing – Theseareenergypricesthataresetforaspecific

time period on an advance or forward basis and which may change according to price changes in the

market.Pricespaidforenergyconsumedduringtheseperiodsaretypicallyestablishedandknownto

consumersadayahead(“day-aheadpricing”)oranhourahead(“hour-aheadpricing”)inadvanceofsuch

consumption,allowingthemtovarytheirdemandandusageinresponsetosuchpricesandmanage

theirenergycostsbyshiftingusagetoalowercostperiod,orreducingconsumptionoverall.

POWER SYSTEM FACT

In the United States, the average

generating station was built in the

1960s using even older technology. Today, the

average age of a substation transformer

is 42, two years more than their

expected life span.

Section Five : CONTINUED

coMpARe And contRASt: A gRId WhERE EvERythIng Is PossIBlE

18

Now for the good news. The Smart Grid connects consumers to the grid in a way that

isbeneficialtoboth,becauseitturnsoutthere’salotthataverageconsumerscando

to help the grid.

Simply by connecting to consumers – by means of the right price signals and

smartappliances,forexample–asmartergridcanreducetheneedforsomeofthat

infrastructurewhilekeepingelectricityreliableandaffordable.Asnoted,duringepisodes

ofpeakdemand,stressonthegridthreatensitsreliabilityandraisestheprobabilityof

widespread blackouts.

By enabling consumers to automatically reduce demand for brief periods through

newtechnologiesandmotivatingmechanismslikereal-timepricing,thegridremains

reliable – and consumers are compensated for their help.

Enabling consumer participation also provides tangible results for utilities which are

experiencingdifficultyinsitingnewtransmissionlinesandpowerplants.Ultimately,

tapping the collaborative power of millions of consumers to shed load will put

significantbrakesontheneedfornewinfrastructureatanycost.Instead,utilities

willhavetimetobuildmorecost-efficienciesintotheirsitingandbuildingplans.

Consumers are more willing to be engaged.

Consumersareadvocatingforchoiceinmarketaftermarket,fromtelecomto

entertainment. Already comfortable with the concept of time-differentiated service

thankstotime-dependentcellphoneratesandairlinefares,itfollowsthattheyjust

mightwantinsightandvisibilityintotheenergychoicestheyaremaking,too.Enabled

bySmartGridtechnologyanddynamicpricing,consumerswillhavetheopportunityto

see what price they are paying for energy before they buy – a powerful motivator toward

managing their energy costs by reducing electric use during peak periods.

Currently,recognitionofthetime-dependentcostofenergyvariesbyregion.Inareas

wherecostsarelowandspecializedratestothispointnon-existent,thereislittle

interest or economic incentive on the part of the consumer to modify usage or even

thinkaboutenergyhavinganhourlycost.InCalifornia,onahotafternoon,consumers

are well aware of the possibility of a blackout driven by peak demand and familiar with

adjustingtheirenergyusageaccordingly.

Efficiency is the way.

10%ofallgenerationassetsand

25%ofdistributioninfrastructure

are required less than 400 hours

peryear,roughly5%ofthetime.

While Smart Grid approaches can’t

completely displace the need to

buildnewinfrastructure,they

willenablenew,morepersistent

forms of demand response that will

succeed in deferring or avoiding

some of it.

The rewards of getting involved.

Smart Grid consumer mantra: Ask not what the grid

can do for you. Ask what you can do for the grid – and

prepare to get paid for it.

19

Given new awareness, understanding, tools and education made possible by a smarter

grid, all consumers will be able to make choices that save money, enhance personal

convenience, improve the environment – or all three.

The message from consumers about the Smart Grid: Keep It Simple.

ResearchindicatesthatconsumersarereadytoengagewiththeSmartGridaslong

astheirinterfacewiththeSmartGridissimple,accessibleandinnowayinterferes

with how they live their lives. Consumers are not interested in sitting around for an

hour a day to change how their house uses energy; what they will do is spend two

hoursperyeartosettheircomfort,priceandenvironmentalpreferences–enabling

collaboration with the grid to occur automatically on their behalf and saving money

each time.

Attheresidentiallevel,SmartGridmustbesimple,“set-it-and-forget-it”technology,

enablingconsumerstoeasilyadjusttheirownenergyuse.Equippedwithrich,useful

information,consumerscanhelpmanageloadon-peaktosavemoneyandenergyfor

themselvesand,ultimately,allofus.

The Smart Grid as it applies to our environment.

Whilethenation’stransportationsectoremits20%ofallthecarbondioxidewe

produce,thegenerationofelectricityemits40%–clearlypresentinganenormous

challenge for the electric power industry in terms of global climate change. Smart

Griddeploymentisakeytoolinaddressingthechallengesofclimatechange,

ultimatelyandsignificantlyreducinggreenhousegasesandcriteriapollutantssuch

asNOx,SOxandparticulates.

Forthegrowingnumberofenvironmentally-awareconsumers,asmartergridfinally

provides a “window” for them to assess and react to their personal environmental

impacts.Already,someutilitiesareinformingconsumersabouttheircarbon

footprintalongsidetheirenergycosts.Intime,theSmartGridwillenableconsumers

to react in near real-time to lessen their impacts.

smart definition: criteria pollutants - Criteria pollutants are six common

airpollutantsthatthescientificcommunityhasestablishedasbeingharmfultoourhealth

andwelfarewhenpresentatspecifiedlevels.Theyincludenitrogendioxide(NOx),carbon

monoxide,ozone,lead,sulfurdioxide(SOx)andparticulatematter,whichincludesdirt,soot,

carandtruckexhaust,cigarettesmoke,spraypaintdroplets,andtoxicchemicalcompounds.

POWER SYSTEM FACT

From 1988-98, U.S. electricity

demand rose by nearly 30 percent,

while the transmission network’s capacity

grew by only 15%. Summer peak demand is

expected to increase by almost 20%

during the next 10 years.

Section Five : CONTINUED

coMpARe And contRASt: A gRId WhERE EvERythIng Is PossIBlE

20

For utilities, adoption of the Smart Grid clears the air on several fronts.

Energy efficiency:

Ontheloadside,consumerscapableofexercisingusagecontrolaresuddenlyand

simultaneouslyalsoabletoexercisetheirenvironmentalstewardship,resultingin

tremendousconsumer-sideenergyefficiencies.

Avoidance of new construction:

Increased asset optimization made possible by a smarter grid means more reliance

uponthemostefficientpowerplantsandlessrelianceupontheleastefficient,more

expensive-to-runpeakerplants.Optimizingpowerplantutilizationcouldalsoallow

utilities to defer new generation investments or reduce dependence upon sometimes

volatileandexpensivewholesalemarkets.Utilitiesstandtobenefitfromlowercosts,

whichincreaseprofits.

The ability to effectively manage load with existing transmission and distribution

infrastructure means that – ultimately – utilities would no longer have to build or

could at least defer infrastructure to account for rapidly increasing peak demand.

Integration of renewable energy sources:

Giventhesignificantconcernsregardingclimatechange,theneedfordistributed

solarandwindpoweriscritical.AccordingtotheEuropeanWindEnergyAssociation,

integratingwindorsolarpowerintothegridatscale–atlevelshigherthan20%–

will require advanced energy management techniques and approaches at the grid

operator level. The Smart Grid’s ability to dynamically manage all sources of power

on the grid means that more distributed generation can be integrated within it.

21

Preparation for the future:

A smarter grid is also a necessity for plugging in the next generation of

automotivevehicles–includingplug-inhybridelectricvehicles(PHEVs)–

to provide services supporting grid operation. Such ancillary services hold

the potential for storing power and selling it back to the grid when the

grid requires it.

Enabledbynewtechnologies,plug-inhybridvehicles–currently

scheduled for showroom floors by 2010 – may dramatically reduce our

nation’sforeignoilbill.AccordingtothePacificNorthwestNational

Laboratory,existingU.S.powerplantscouldmeettheelectricityneeds

of73%ofthenation’slightvehicles(i.e.,carsandsmalltrucks)ifthe

vehicles were replaced by plug-ins that recharged at night. Such a shift

wouldreduceoilconsumptionby6.2millionbarrelsperday,eliminating

52%ofcurrentimports.

However, there is a lot more to realizing this potential than simply plugging in.

Without an integrated communications infrastructure and corresponding

pricesignals,handlingtheincreasedloadofplug-inhybridsandelectric

vehicleswouldbeexceedinglydifficultandinefficient.SmartChargers,

however – enabled by the Smart Grid – will help manage this new

energy device on already constrained grids and avoid any unintended

consequences on the infrastructure.

smart definition : off peak

Aperiodofrelativelylowsystemdemand,oftenoccurringindaily,weekly,and

seasonalpatterns.Off-peakperiodsdifferforeachindividualelectricutility.

To get a greener grid, you need

a Smart Grid.

Solar and wind power are necessary

and desirable components of a cleaner

energy future. To make the grid run

cleaner,itwilltakeagridcapableof

dealing with the variable nature of

these renewable resources.

Section Five : CONTINUED

coMpARe And contRASt: A gRId WhERE EvERythIng Is PossIBlE

22

What might the longer-term future look like?

It is a decade from now.

An unusually destructive storm has isolated a community or

region.Tenyearsago,thewaitfortheappearanceofautility’s

“trouble trucks” would begin. The citizens would remain literally

inthedark,theirfoodspoiling,theirsecuritycompromisedand

their families at risk.

Instead,withfullSmartGriddeployment,thisfuturecommunity

isnotwaiting.Instead,it’sableimmediatelytotakeadvantage

of distributed resources and standards that support a Smart

Grid concept known as “islanding.” Islanding is the ability of

distributed generation to continue to generate power even when

power from a utility is absent. Combining distributed resources

ofeverydescription–rooftopPV(solar),fuelcells,electric

vehicles–thecommunitycangeneratesufficientelectricityto

keepthegrocerystore,thepolicedepartment,trafficlights,the

phone system and the community health center up and running.

Whileitmaytakeaweektorestorethelines,thegeneration

potential resident in the community means that citizens still

havesufficientpowertomeettheiressentialneeds.

thIs Is PoWER FRom thE PEoPlE.And it is coming.

With a smarter grid at work, a community

“without power” is far from powerless.

23

Whenelectricity’sregulatorycompactwasfirststruckinthe1930s,

a nation with little appetite for monopolies recognized the provision

ofelectricityasa“naturalmonopoly”service,onebestaccomplished

byasingleentity,whetheritwasinvestor-owned,amunicipalutility

or a co-op.

Underthetermsofthecompact,inexchangeforprovidingelectric

servicetoallconsumerswithintheutility’sserviceterritory,utilities

were provided a return on their investments plus a return on those

investments commensurate with risks they take in ensuring service

and reliability. State regulatory commissions were charged with

determining whether the investments made were prudent and what

a reasonable return on those investments should be.

FiRSt tHinGS FiRSt: tEAsIng out thE ComPlExItIEs.

Getting from Point A to Point B – from our

present grid to the Smart Grid – requires

a brief examination of the history and

culture of the industry’s primary custodians;

namely, utilities and regulators.

SMART GRID FACT

The American Public Power

Association (APPA) has launched

a task force to develop a framework for

deploying Smart Grid technologies in

a public-power environment.

Section SiX:

24

Overtheensuingdecades,muchhardworkwasdoneonboth

sides of the compact as much of the grid as we know it was built.

Withinutilities,effortstowardthisobjectiveweretypically

segmented or “siloed.” This division of labor worked well for

utilities,providingefficiencieswithintheorganizationforquick

execution and maintenance of system reliability.

Meanwhile,regulatorsfocusontheirrespectivestatesasa

matteroflaw,anunderstandablecircumstancegiventhateach

statemustanswerfirstandforemosttoitscitizensandtheir

uniquesetofneeds,resourcesandagendas.

Untilrelativelyrecently,thisstatutoryarrangementhasresulted

in little regulatory action among the states and little reason to

engageincollectiveactiononanationalbasis,althoughthey

work at common purposes through regional associations.

Similarly,regulatedutilitieshavetraditionallybeenreactive,

with no need or incentive to be proactive on a national level.

Wellalignedforutilityoperations,theyarenotnecessarilywell

positioned for integrated strategic initiatives like the Smart Grid

although they have collectively and forcefully advocated in the

past on issues such as security and climate change.

STATES TAKING ACTION:

25

state amount year rps administrator

Arizona 15% 2025 Arizona Corporation Commission

California 20% 2010 California Energy Commission

Colorado 20% 2020 Colorado Public Utilities Commission

Connecticut 23% 2020 Department of Public Utility Control

District of Columbia 11% 2022 DC Public Service Commission

Delaware 20% 2019 Delaware Energy Office

Hawaii 20% 2020 Hawaii Strategic Industries Division

Iowa 105 MW Iowa Utilities Board

Illinois 25% 2025 Illinois Department of Commerce

Massachusetts 4% 2009 Massachusetts Division of Energy Resources

Maryland 9.5% 2022 Maryland Public Service Commission

Maine 10% 2017 Maine Public Utilities Commission

Minnesota 25% 2025 Minnesota Department of Commerce

Missouri* 11% 2020 Missouri Public Service Commission

Montana 15% 2015 Montana Public Service Commission

New Hampshire 16% 2025 New Hampshire Office of Energy and Planning

New Jersey 22.5% 2021 New Jersey Board of Public Utilities

New Mexico 20% 2020 New Mexico Public Regulation Commission

Nevada 20% 2015 Public Utilities Commission of Nevada

New York 24% 2013 New York Public Service Commission

North Carolina 12.5% 2021 North Carolina Utilities Commission

Oregon 25% 2025 Oregon Energy Office

Pennsylvania 18% 2020 Pennsylvania Public Utility Commission

Rhode Island 15% 2020 Rhode Island Public Utilities Commission

Texas 5,880 MW 2015 Public Utility Commission of Texas

Utah* 20% 2025 Utah Department of Environmental Quality

Vermont* 10% 2013 Vermont Department of Public Service

Virginia* 12% 2022 Virginia Department of Mines, Minerals, and Energy

Washington 15% 2020 Washington Secretary of State

Wisconsin 10% 2015 Public Service Commission of Wisconsin

* Four states, Missouri,

Utah, Vermont, &

Virginia, have set

voluntary goals for

adopting renewable

energy instead of

portfolio standards

with binding targets.

30 states have developed and adopted renewable portfolio standards, which require

a pre-determined amount of a state’s energy portfolio (up to 20%) to come exclusively

from renewable sources by as early as 2010.

WithgrowingconsensusaroundthecrucialneedforSmartGriddeployment,

the cultures of these entities are now changing dramatically.

Fortheirpart,regulatorsareactivelysharingideasandinformationwithother

states.Actingwithaneyetowardnationalagreement,twenty-ninestates

havealsodevelopedandadoptedrenewableportfoliostandards,whichrequire

apre-determinedamountofastate’senergyportfolio(upto20%)tocome

exclusively from renewable sources by as early as 2010.

Regulatorsonboththestateandfederallevelaresteppinguptheirdialog.

StateregulatorsrepresentedbytheNationalAssociationofRegulatory

UtilityCommissions(NARUC)areexploringoptionsforexpeditingSmart

Gridimplementationwiththeirfederalcounterpart,theFederalEnergy

RegulatoryCommission(FERC).Meanwhile,DOEisprovidingleadershipwith

thepassingintolawoftheEnergyIndependenceandSecurityActof2007

(EISA),whichcodifiesaresearch,developmentanddemonstrationprogram

for Smart Grid technologies.

Thankstotheseandotherefforts,manyregulatorsaremovingtowardnew

regulations designed to incentivize utility investment in the Smart Grid.

Amongthesearedynamicpricing,sellingenergybacktothegrid,andpolicies

thatguaranteeutilitiescostrecoveryand/orfavorabledepreciationonnew

Smart Grid investments and legacy systems made obsolete by the switch

to “smart meters” and other Smart Grid investments.

Section SiX : CONTINUED

FiRSt tHinGS FiRSt: tEAsIng out thE ComPlExItIEs

26

Asforutilities,anincreasingnumberofthemaretakingamoreintegrated

viewofasmartergrid,particularlywhenthereareareasofoverlapthatcan

beleveragedforcostreductionorbenefitincrease.Thereareregulatory

implicationshereaswell;ifutilitiesaretoargueforcostrecoveryproject

byprojectratherthanbysingleintegratedplan,somebeneficialaspects

of deployment of a smarter grid could be lost.

Integratedplansarebeingproposedandconsidered.InCalifornia,smart

meters only became economic when the commission considered non-utility

benefits–benefitstoconsumersfromlowerbills.

Toanindustryhistoricallyregulatedforpriorinvestment,thetransformation

to regulation for value delivery promises to stimulate substantial progress

and alignment around the Smart Grid vision and implementation. Keep in

mind,though,thatregulatorswillcontinuetorequireashowingthatthe

value of the investments to consumers – whatever they may be – ultimately

exceeds the costs.

27

SMART GRID FACT

To advance the modernization

of our nation’s electric grid, DOE has

entered into public/private partnerships

with leading champions of the Smart Grid

which include the GridWise Alliance,

EPRI/Intelligrid, and the Galvin

Electricity Initiative.

The industry is not without its role models in this regard.

Consider the ATM. It is available virtually anywhere. Every

unitfeaturesasimilaruserinterface,understandablewhether

ornotyouknowthelocallanguage.Usersdon’tgiveitasecond

thought.Itsimplyworks.YetthefactthattheATMexistsat

all was made possible only by industry-wide agreement on

amultitudeofcommonstandards,fromcommunicationto

security to business rules.

Fortunately,theagendasofutilities,regulatorsandautomation

vendors are rapidly aligning and movement toward identifying

and adopting Smart Grid standards is gaining velocity.

HoW tHinGS WoRk: CREAtIng thE PlAtFoRm FoR thE smARt gRId.

Open architecture. Internet protocol. Plug

and play. Common technology standards.

Non-proprietary. Interoperability.

Fine concepts all, yet one of the reasons

the electric industry has been slow to take

advantage of common technology standards

– which would speed Smart Grid adoption – is

a lack of agreement on what those standards

should be and who should issue them.

Section Seven:

28

DOE lists five fundamental technologies that will drive the Smart Grid:

• Integratedcommunications,connectingcomponentstoopenarchitectureforreal-time

informationandcontrol,allowingeverypartofthegridtoboth‘talk’and‘listen’

• Sensingandmeasurementtechnologies,tosupportfasterandmoreaccurateresponse

suchasremotemonitoring,time-of-usepricinganddemand-sidemanagement

• Advancedcomponents,toapplythelatestresearchinsuperconductivity,storage,power

electronics and diagnostics

• Advancedcontrolmethods,tomonitoressentialcomponents,enablingrapiddiagnosisand

precise solutions appropriate to any event

• Improvedinterfacesanddecisionsupport,toamplifyhumandecision-making,transforminggrid

operators and managers quite literally into visionaries when it come to seeing into their systems

killer app

WillthePHEVbetheSmartGrid’s“killerapp,”theoutwardexpression

of the Smart Grid that consumers adopt en masse as they did e-mail?

There are plenty of experts who think so.

TheNationalInstituteofStandardsandTechnology(NIST),

anagencyoftheU.S.DepartmentofCommerce,hasbeen

charged under EISA (Energy Independence and Security

Act)withidentifyingandevaluatingexistingstandards,

measurementmethods,technologies,andothersupport

inservicetoSmartGridadoption.Additionally,theywillbe

preparing a report to Congress recommending areas where

standards need to be developed.

The GridWise Architecture Council is an important resource

forNIST.TheCouncil,representingawidearrayofutilityand

technologystakeholdersandunderwrittenbyDOE,hasbeen

workingcloselywithNISTtodevelopcommonprinciplesandan

interoperability framework spanning the entire electricity delivery

chain.Already,theworkoftheGridWiseArchitectureCounciland

otherorganizationssuchasANSI(AmericanNationalStandards

Institute),IEEE(InstituteofElectricalandElectronicsEngineers)

and the ZigBee Alliance have enabled a smarter grid to readily

accept innovation across a wide spectrum of applications.

29

Integration in practice.

OnWashington’sOlympicPeninsula,aDOEdemonstrationprojectsetin

motion a sophisticated system that responded to simple instructions set

inplacebyaconsumerinhisorherpreferenceprofile.Meanwhile,inthe

background,energywasmanagedontheconsumer’sbehalftosavemoney

and reduce the impact on the grid.

Consumerssavedapproximately10%ontheirbills.Moresignificantly,peak

loadwasreducedby15%,bringingtheconstrainedregionalgridanother

3-5yearsofpeakloadgrowthandenablingtheinstallationofcleaner,

moreefficienttechnologiesforsupply.

Acrossthenation,companiesaredevelopingnewSmartGridtechnologies

for utility-scale deployments that are progressively raising the bar on what

is possible and practical.

Section Seven : CONTINUED

HoW tHinGS WoRk: CREAtIng thE PlAtFoRm FoR thE smARt gRId.

30

Steps toward a common “language.”

Theindependent,non-profitElectric

PowerResearchInstitute(EPRI)is

also conducting research on key

issues facing the electric power

industry and working towards the

development of open standards for

the Smart Grid. The International

ElectroTechnicalCommission(IEC)

recentlypublishedEPRI’sIntelliGrid

MethodologyforDeveloping

RequirementsforEnergySystems

asapubliclyavailablespecification.

advancements also in development…

Zero-net energy commercial buildings:

Whethermeasuredbycost,energy,orcarbonemissions,structuresequippedwithSmart

Grid technologies capable of balancing energy generation and energy conservation.

Superconducting power cables:

Capable of reducing line losses and carrying 3-5 times more power in a smaller

right of way than traditional copper-based cable.

Energy storage:

Whileelectricitycannotbeeconomicallystored,energycanbe–withtheapplication

ofSmartGridtechnologies.Thermalstorage,sometimescalledhybridairconditioning,

holds promising potential for positively affecting peak load today. Also of note is the

near-termpotentialoflithium-ionbatteriesforPHEVapplications.

Advanced sensors:

Monitoringandreportinglineconditionsinrealtime,advancedsensorsenablemore

power to flow over existing lines.

Another look at the future: PHEV (Plug-in Hybrid Electric Vehicles)

Assumingcustomeracceptanceregardingprice,performanceandlongevity,these

vehicles offer consumers the opportunity to shift use of oil and gasoline to electricity

–andtopoweracarfortheequivalentof$.90pergallon.(Asinefficientasthegrid

istoday,itiscleaneronbalancethanoilandgasoline.)Consumersgetfarmore

affordabletransportation.Relyingmoreonelectricityfortransportationandless

on fossil fuels increases our energy independence as well as our environmental

prospects.PHEVstakeadvantageoflowercostandoff-peakcapacityandcanprovide

grid support during the peak periods.

31

pRoGReSS noW!:A look At CuRREnt smARt gRId EFFoRts And hoW thEy’RE suCCEEdIng.

The Department of Energy is actively

engaged in supporting a wide variety of

Smart Grid projects. The role of DOE is to

act as an objective facilitator, allowing the

best ideas to prove themselves. Smart Grid

efforts are well underway on several key

fronts, from forward-thinking utilities to

the 50th state.

SMART GRID FACT

States such as Texas, California,

Ohio, New Jersey, Illinois, New York

and others are already actively exploring

ways to increase the use of tools and

technologies toward the realization

of a smarter grid.

Section eiGHt:

32

Distribution Management System (DMS) Platform by the University of Hawaii

Theintegratedenergymanagementplatformwillbedeveloped,featuringadvancedfunctionsfor

home energy management by consumers and for improved distribution system operations by utilities.

ThisplatformwillintegrateAMIasahomeportalfordemandresponse;homeautomationforenergy

conservation;optimaldispatchofdistributedgeneration,storage,andloadsinthedistribution

system,andcontrolstomakethedistributionsystemadispatchableentitytocollaboratewithother

entities in the bulk grid.

Homeenergymanagementofthistypewillenableconsumerstotakecontrol,automatingenergy

conservation and demand response practices based on their personal preferences.

ThehomeautomationwillbebasedontheSmartMeterandecoDashboardproductsfromGeneral

Electric.TheSmartMeterwithaZigBeenetworkwillcommunicatewithhouseholdappliances,and

thedashboardwillautomatecontrolsoftheiroperations.Inaddition,thisplatformwillprovideancillary

servicestothelocalutilitysuchasspinningreserve,load-followingregulation,andintermittency

managementforwindandsolarenergy.ThisplatformwillbedeployedattheMauiLaniSubstation

inMaui,Hawaii.

Perfect Power by Illinois Institute of Technology (IIT)

A“PerfectPower”systemisdefinedas:Anelectricsystemthatcannotfailtomeettheelectricneeds

oftheindividualend-user.APerfectPowersystemhastheflexibilitytosupplythepowerrequiredby

various types of end-users and their needs without fail. The functionalities of such a system will be

enabled by the Smart Grid.

ThisprojectwilldesignaPerfectPowerprototypethatleveragesadvancedtechnologytocreate

microgrids responding to grid conditions and providing increased reliability and demand reduction.

This prototype model will be demonstrated at the IIT campus to showcase its operations to the

industry. The model is designed to be replicable in any municipality-sized system where customers

can participate in electric market opportunities.

33

West Virginia Super Circuit by Allegheny Energy

Thesupercircuitprojectisdesignedtodemonstrateanadvanceddistributioncircuit

with improved reliability and security through integration of distributed resources

andadvancedmonitoring,control,andprotectiontechnologies.Thiscircuitwill

integratebiodieselgenerationandenergystoragewiththeAMIandamesh-based

Wi-Ficommunicationsnetworkforrapidfaultanticipationandlocationandrapidfault

restoration with minimized impact to customers.

Currentlyduringacircuitfault,allcustomersonthiscircuitarebeingaffectedwith

power loss or with power quality issues. The super circuit will demonstrate an ability

todynamicallyreconfigurethecircuittoallowisolationofthefaultedsegment,

transferuninterruptedservicesto“unfaulted”segments,andtapsurpluscapacity

fromadjacentfeederstooptimizeconsumerservice.

Beach Cities MicroGrid by San Diego Gas & Electric

Asitsnameimplies,amicrogridresemblesourcurrentgridalthoughonamuch

smallerscale.Itisuniqueinitsability–duringamajorgriddisturbance–toisolate

from the utility seamlessly with little or no disruption to the loads within it and

seamlessly reconnect later.

TheBeachCitiesMicrogridProjectwillbedemonstratedatanexistingsubstation

identifiedas“BeachCitySubstation.”Itisintendedtoofferablueprinttoalldistribution

utilities – proving the effectiveness of integrating multiple distributed energy resources

with advanced controls and communications. It seeks to improve reliability and reduce

peak loads on grid components such as distribution feeders and substations.

Bothutility-ownedandcustomer-ownedgeneration,i.e.,photovoltaic(PV)systems

andbiodiesel-fueledgenerators,andenergystoragewillbeintegratedalongwith

advancedmeteringinfrastructure(AMI)intothereal-worldsubstationoperations

withapeakloadofapproximately50MW.

Beach Cities will serve as a guide for improved asset use as well as for operating the

entire distribution network in the future. Successfully “building” such capabilities

will enable customer participation in reliability- and price-driven load management

practices,bothofwhicharekeytotherealizationofasmartergrid.

Section eiGHt : CONTINUED

pRoGReSS noW! : A look At CuRREnt smARt gRId EFFoRts And hoW thEy’RE suCCEEdIng

34

High Penetration of Clean Energy Technologies by The City of Fort Collins

Thecityanditscity-ownedFortCollinsUtilitysupportawidevarietyofcleanenergy

initiatives,includingtheestablishmentofaZeroEnergyDistrictwithinthecity

(knownasFortZED).

Onesuchinitiativeseekstomodernizeandtransformtheelectricaldistribution

system by developing and demonstrating an integrated system of mixed distributed

resources to increase the penetration of renewables – such as solar and wind – while

deliveringimprovedefficiencyandreliability.

These and other distributed resources will be fully integrated into the electrical

distributionsystemtosupportachievementofaZeroEnergyDistrict.Infact,this

DOE-supportedprojectinvolvestheintegrationofamixofnearly30distributed

generation,renewableenergy,anddemandresponseresourcesacross5customer

locationsforanaggregatedcapacityofmorethan3.5Megawatts.

The resources being integrated include:

•photovoltaic (PV)

•microturbines(smallcombustionturbinesthat

produce between 25 kW and 500 kW of power)

•dual-fuelcombinedpowerandheat(CHP)systems

(utilizing the by-product methane generated from

a water treatment plant operation)

•reciprocating(orinternalcombustion)engines

•backupgenerators

•wind

•plug-inhybridelectricvehicles(PHEV)inan

ancillary-services role

•fuelcells

Thisprojectwillhelpdeterminethemaximumdegreeofpenetrationofdistributed

resources based on system performance and economics.

35

ediSon UnBoUnd: WhAt’s youR stAkE In All thIs?

When Smart Grid implementation

becomes reality, everyone wins –

and what were once our risks become

our strengths.

Section nine:

36

LET’S REVISIT THAT LIST:

EFFICIENCY: It is estimated that tens of billions of dollars

will be saved thanks to demand-response programs that

providemeasurable,persistentsavingsandrequireno

human intervention or behavior change. The dramatically

reduced need to build more power plants and transmission

lineswillhelp,too.

RELIABILITY: ASmartGridthatanticipates,detectsand

responds to problems rapidly reduces wide-area blackouts to

near zero (and will have a similarly diminishing effect on the

lostproductivity).

AFFORDABILITY:Energypriceswillrise;however,the

trajectoryoffuturecostincreaseswillbefarmoregradual

post-SmartGrid.SmartGridtechnologies,tools,and

techniques will also provide customers with new options for

managing their own electricity consumption and controlling

their own utility bills.

SECURITY: The Smart Grid will be more resistant to attack

andnaturaldisasters.Sofortified,itwillalsomoveus

towardenergyindependencefromforeignenergysources,

whichthemselvesmaybetargetsforattack,outsideofour

protection and control.

ENVIRONMENT/CLIMATE CHANGE:Clean,renewable

sourcesofenergylikesolar,wind,andgeothermalcaneasily

be integrated into the nation’s grid. We reduce our carbon

footprint and stake a claim to global environmental leadership.

NATIONAL ECONOMY: Openingthegridtoinnovationwill

enable markets to grow unfettered and innovation to flourish.

Forcomparison’ssake,considerthemarket-makingeffect

of the opening of the telephone industry in the 1980s. With

revenuesof$33billionatthetime,theensuingproliferation

of consumer-centric products and services transformed it into

a$117billionmarketasof2006.

GLOBAL COMPETITIVENESS:Regainingourearlyleadinsolar

and wind will create an enduring green-collar economy.

37

“We are being

presented with unprecedented

opportunity and challenge across

our industry. By coming together

around a shared vision of a smarter grid,

we have an equally unprecedented opportunity

and challenge for shaping our industry’s

and our nation’s future.”

stEvEn g hAusER president,

the gridwise alliance

Section nine : CONTINUED

ediSon UnBoUnd: WhAt’s youR stAkE In All thIs?

38

TODAY’s GRID. AND TOMORROW’s.

Characteristic Today’s Grid Smart Grid

Enables active participation

by consumers

Accommodates all generation

and storage options

Enables new products, services

and markets

Provides power quality for the

digital economy

Optimizes assets & operates

efficiently

Anticipates and responds to system

disturbances (self-heals)

Operates resiliently against attack

and natural disaster

Consumers are uninformed and

non-participative with power system

Dominated by central generation- many

obstacles exist for distributed energy

resources interconnection

Limited wholesale markets, not well

integrated - limited opportunities for

consumers

Focus on outages - slow response to power

quality issues

Little integration of operational data with

asset management - business process silos

Responds to prevent further damage- focus

is on protecting assets following fault

Vulnerable to malicious acts of terror and

natural disasters

Informed, involved, and active

consumers - demand response and

distributed energy resources.

Many distributed energy resources

with plug-and-play convenience focus

on renewables

Mature, well-integrated wholesale

markets, growth of new electricity

markets for consumers

Power quality is a priority with a variety

of quality/price options - rapid resolution

of issues

Greatly expanded data acquisition of

grid parameters - focus on prevention,

minimizing impact to consumers

Automatically detects and responds

to problems - focus on prevention,

minimizing impact to consumer

Resilient to attack and natural disasters

with rapid restoration capabilities

TheSmartGridcreatesvalueupanddownthevaluechain,muchlikethe

internethas.Aswe’veexperiencedwiththeinternet,affordable,rapidand

universalcommunicationcanenablesophisticatedtransactions,create

entirely new business models and sweep across society with surprising speed.

Consider for a moment your iPod, YouTube, internet banking…

Priortotheinternet’sadoption,marketsdidn’thavetheabilitytooperateas

cost-effectivelyandproductivelyastheydotoday.Fewpredictedthatpeople

would engage as seriously with the internet as they have. And no one could

have predicted the revolutionary advancements it has fostered.

Similarly,wehadnoideathattheinternetwouldrevolutionizesomany

aspects of our lives.

The Smart Grid represents the relatively simple extension of this movement

to power consumption.

ThomasEdison,TheWizardofMenloPark,wouldapproveoftheenterprise

and innovation that drive the Smart Grid. He might even ask what took

ussolong.Newtechnologiesandpublicpolicies,economicincentivesand

regulations are aligning to bring the Smart Grid to full implementation. Its

success is imperative to the economic growth and vitality of America far

into the future.

We hope that The Smart Grid: An Introduction has given you a clearer

understanding of the need for immediate and concerted action in the

transformationofournation’selectricalgrid.Tolearnmore,pleasevisit

the websites listed on the following page.

“If we all did the things we are capable of doing,

we would literally astound ourselves.”

thomas a. edison (1847-1931)

39

souRCEsSources for this book include the Department of Energy, the GridWise Alliance, the Galvin Electricity Initiative

and EPRI/Intelligrid.

REsouRCEs

2007 INTERGRAPH ROCKET CITY GEOSPATIAL CONFERENCE:

Presentation:http://www.directionsmag.com/images/RCG/Main/Damon%20Dougherty.ppt#257,3,What%20is%20Smart%20Grid

COLUMBIA UNIVERSITY:http://www.ldeo.columbia.edu/res/pi/4d4/testbeds/Smart-Grid-White-Paper.pdf

EEI :

http://www.eei.org/industry_issues/electricity_policy/advanced_metering_infrastructure.htm

http://www.eei.org/magazine/editorial_content/nonav_stories/2007-09-01-Smart.pdf

http://www.eei.org/magazine/editorial_content/nonav_stories/2005-01-01-Smarter.pdf

ENERGY FUTURE COALITION :

Smart Grid Working Group:http://www.energyfuturecoalition.org/preview.cfm?catID=13

Reports:http://www.energyfuturecoalition.org/pubs/app_smart_grid.pdf

http://energyfuturecoalition.org/pubs/PJMsmartgrid.pdf

ELSTER:

http://www.eei.org/meetings/nonav_2008-02-06-ja/Gray_Elster.pdf

http://www.eei.org/industry_issues/electricity_policy/federal_legislation/deciding_on_smart_meters.pdf

GRIDPOINT:http://www.electricitydeliveryforum.org/pdfs/Gridpoint_SmartGrid.pdf

NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION:

Presentation:http://www.nema.org/gov/energy/smartgrid/upload/Presentation-Smart-Grid.pdf

NATIONAL ENERGY TECHNOLOGIES LABORATORY:

Presentation:http://www.energetics.com/supercon07/pdfs/NETL_Synergies_of_the_SmartGrid_and_Superconducitivity_Pullins.pdf

THE PEW CENTER ON GLOBAL CLIMATE CHANGE:

Workshop Proceedings:http://www.pewclimate.org/docUploads/10-50_Anderson_120604_120713.pdf

SAN DIEGO SMART GRID STUDY:http://www.sandiego.edu/epic/publications/documents/061017_SDSmartGridStudyFINAL.pdf

SMART GRID NEWS: http://www.smartgridnews.com/artman/publish/index.html

XCEL ENERGY:

Smart Grid City Web site:http://www.xcelenergy.com/XLWEB/CDA/0,3080,1-1-1_15531_43141_46932-39884-0_0_0-0,00.html

EPRI INTELLIGRID:http://intelligrid.epri.com/

PNNL GRIDWISE: http://gridwise.pnl.gov/

SMART GRID TASK FORCE: http://www.oe.energy.gov/smartgrid_taskforce.htm

SMART GRID: http://www.oe.energy.gov/smartgrid.htm

GRIDWISE ALLIANCE: www.gridwise.org

GRID WEEK: www.gridweek.com

40

glossARy: ComIng to tERms WIth thE smARt gRId

AMI:AdvancedMeteringInfrastructureisatermdenotingelectricitymetersthatmeasureandrecordusagedataataminimum,inhourly

intervals,andprovideusagedatatobothconsumersandenergycompaniesatleastoncedaily.

AMR:AutomatedMeterReadingisatermdenotingelectricitymetersthatcollectdataforbillingpurposesonlyandtransmitthisdataoneway,

usually from the customer to the distribution utility.

ANCILLARY SERVICES: Services that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such

servicesmayinclude:loadregulation,spinningreserve,non-spinningreserve,replacementreserve,andvoltagesupport.

APPLIANCE:Apieceofequipment,commonlypoweredbyelectricity,usedtoperformaparticularenergy-drivenfunction.Examplesofcommon

appliancesarerefrigerators,clotheswashersanddishwashers,conventionalranges/ovensandmicrowaveovens,humidifiersanddehumidifiers,

toasters,radios,andtelevisions.Note:Appliancesareordinarilyself-containedwithrespecttotheirfunction.Thus,equipmentsuchascentral

heatingandairconditioningsystemsandwaterheaters,whichareconnectedtodistributionsystemsinherenttotheirpurposes,arenot

considered appliances.

CAPITAL COST:Thecostoffielddevelopmentandplantconstructionandtheequipmentrequiredforindustryoperations.

CARBON DIOXIDE (CO2):Acolorless,odorless,non-poisonousgasthatisanormalpartofEarth’satmosphere.Carbondioxideisaproductof

fossil-fuelcombustionaswellasotherprocesses.Itisconsideredagreenhousegasasittrapsheat(infraredenergy)radiatedbytheEarthinto

theatmosphereandtherebycontributestothepotentialforglobalwarming.Theglobalwarmingpotential(GWP)ofothergreenhousegasesis

measuredinrelationtothatofcarbondioxide,whichbyinternationalscientificconventionisassignedavalueofone(1).

CLIMATE CHANGE:Atermusedtorefertoallformsofclimaticinconsistency,butespeciallytosignificantchangefromoneprevailingclimatic

conditiontoanother.Insomecases,“climatechange”hasbeenusedsynonymouslywiththeterm“globalwarming”;scientists,however,tendto

usetheterminawidersenseinclusiveofnaturalchangesinclimate,includingclimaticcooling.

CONGESTION:Aconditionthatoccurswheninsufficienttransfercapacityisavailabletoimplementallofthepreferredschedulesforelectricity

transmission simultaneously.

DSM:ThisDemand-SideManagementcategoryrepresentstheamountofconsumerloadreductionatthetimeofsystempeakduetoutility

programs that reduce consumer load during many hours of the year. Examples include utility rebate and shared savings activities for the

installationofenergyefficientappliances,lightingandelectricalmachinery,andweatherizationmaterials.Inaddition,thiscategoryincludesall

otherDemand-SideManagementactivities,suchasthermalstorage,time-of-userates,fuelsubstitution,measurementandevaluation,andany

otherutility-administeredDemand-SideManagementactivitydesignedtoreducedemandand/orelectricityuse.

DISTRIBUTED GENERATOR: Ageneratorthatislocatedclosetotheparticularloadthatitisintendedtoserve.General,butnon-exclusive,

characteristics of these generators include: an operating strategy that supports the served load; and interconnection to a distribution or sub-

transmission system.

DISTRIBUTION: The delivery of energy to retail customers.

DISTRIBUTION SYSTEM: The portion of the transmission and facilities of an electric system that is dedicated to delivering electric energy

to an end-user.

ELECTRIC GENERATION INDUSTRY: Stationary and mobile generating units that are connected to the electric power grid and can generate

electricity.Theelectricgenerationindustryincludesthe“electricpowersector”(utilitygeneratorsandindependentpowerproducers)and

industrialandcommercialpowergenerators,includingcombined-heat-and-powerproducers,butexcludesunitsatsingle-familydwellings.

ELECTRIC GENERATOR:Afacilitythatproducesonlyelectricity,commonlyexpressedinkilowatthours(kWh)ormegawatthours(MWh).Electric

generators include electric utilities and independent power producers.

ELECTRIC POWER: The rate at which electric energy is transferred. Electric power is measured by capacity and is commonly expressed in

megawatts(MW).

ELECTRIC POWER GRID: A system of synchronized power providers and consumers connected by transmission and distribution lines and operated

byoneormorecontrolcenters.InthecontinentalUnitedStates,theelectricpowergridconsistsofthreesystems:theEasternInterconnect,

theWesternInterconnect,andtheTexasInterconnect.InAlaskaandHawaii,severalsystemsencompassareassmallerthantheState(e.g.,the

interconnectservingAnchorage,Fairbanks,andtheKenaiPeninsula;individualislands).

ELECTRIC SYSTEM RELIABILITY: The degree to which the performance of the elements of the electrical system results in power being delivered

toconsumerswithinacceptedstandardsandintheamountdesired.Reliabilityencompassestwoconcepts,adequacyandsecurity.Adequacy

impliesthattherearesufficientgenerationandtransmissionresourcesinstalledandavailabletomeetprojectedelectricaldemandplusreserves

forcontingencies.Securityimpliesthatthesystemwillremainintactoperationally(i.e.,willhavesufficientavailableoperatingcapacity)even

afteroutagesorotherequipmentfailure.Thedegreeofreliabilitymaybemeasuredbythefrequency,duration,andmagnitudeofadverseeffects

on consumer service.

42 41

ELECTRIC UTILITY:Anyentitythatgenerates,transmits,ordistributeselectricityandrecoversthecostofitsgeneration,transmissionor

distributionassetsandoperations,eitherdirectlyorindirectly,throughcost-basedratessetbyaseparateregulatoryauthority(e.g.,StatePublic

ServiceCommission),orisownedbyagovernmentalunitortheconsumersthattheentityserves.Examplesoftheseentitiesinclude:investor-

ownedentities,publicpowerdistricts,publicutilitydistricts,municipalities,ruralelectriccooperatives,andStateandFederalagencies.

ELECTRICITY CONGESTION:Aconditionthatoccurswheninsufficienttransmissioncapacityisavailabletoimplementallofthedesired

transactions simultaneously.

ELECTRICITY DEMAND:Therateatwhichenergyisdeliveredtoloadsandschedulingpointsbygeneration,transmission,anddistribution

facilities.

ENERGY EFFICIENCY, ELECTRICITY:Referstoprogramsthatareaimedatreducingtheenergyusedbyspecificend-usedevicesandsystems,

typicallywithoutaffectingtheservicesprovided.Theseprogramsreduceoverallelectricityconsumption(reportedinmegawatthours),often

without explicit consideration for the timing of program-induced savings. Such savings are generally achieved by substituting technologically

moreadvancedequipmenttoproducethesamelevelofend-useservices(e.g.lighting,heating,motordrive)withlesselectricity.Examples

includehigh-efficiencyappliances,efficientlightingprograms,high-efficiencyheating,ventilatingandairconditioning(HVAC)systemsorcontrol

modifications,efficientbuildingdesign,advancedelectricmotordrives,andheatrecoverysystems.

ENERGY SAVINGS:Areductionintheamountofelectricityusedbyendusersasaresultofparticipationinenergyefficiencyprogramsandload

management programs.

ENERGY SERVICE PROVIDER: An energy entity that provides service to a retail or end-use customer.

FEDERAL ENERGY REGULATORY COMMISSION (FERC):TheFederalagencywithjurisdictionoverinterstateelectricitysales,wholesaleelectric

rates,hydroelectriclicensing,naturalgaspricing,oilpipelinerates,andgaspipelinecertification.FERCisanindependentregulatoryagency

withintheDepartmentofEnergyandisthesuccessortotheFederalPowerCommission.

FUEL CELL:Adevicecapableofgeneratinganelectricalcurrentbyconvertingthechemicalenergyofafuel(e.g.,hydrogen)directlyintoelectrical

energy.Fuelcellsdifferfromconventionalelectricalcellsinthattheactivematerialssuchasfuelandoxygenarenotcontainedwithinthecellbut

aresuppliedfromoutside.Itdoesnotcontainanintermediateheatcycle,asdomostotherelectricalgenerationtechniques.

GENERATION: Theprocessofproducingelectricenergybytransformingotherformsofenergy;also,theamountofelectricenergyproduced,

expressed in kilowatthours.

GLOBAL WARMING: An increase in the near surface temperature of the Earth. Global warming has occurred in the distant past as the result

ofnaturalinfluences,butthetermistodaymostoftenusedtorefertothewarmingsomescientistspredictwilloccurasaresultofincreased

anthropogenic emissions of greenhouse gases.

GREENHOUSE GASES: Thosegases,suchaswatervapor,carbondioxide,nitrousoxide,methane,hydrofluorocarbons(HFCs),

perfluorocarbons(PFCs)andsulfurhexafluoride,thataretransparenttosolar(short-wave)radiationbutopaquetolong-wave(infrared)

radiation,thuspreventinglong-waveradiantenergyfromleavingEarth’satmosphere.Theneteffectisatrappingofabsorbedradiation

and a tendency to warm the planet’s surface.

INTERMITTENT ELECTRIC GENERATOR OR INTERMITTENT RESOURCE: An electric generating plant with output controlled by the natural

variabilityoftheenergyresourceratherthandispatchedbasedonsystemrequirements.Intermittentoutputusuallyresultsfromthedirect,non-

storedconversionofnaturallyoccurringenergyfluxessuchassolarenergy,windenergy,ortheenergyoffree-flowingrivers(thatis,run-of-river

hydroelectricity).

INTERRUPTIBLE LOAD:ThisDemand-SideManagementcategoryrepresentstheconsumerloadthat,inaccordancewithcontractual

arrangements,canbeinterruptedatthetimeofannualpeakloadbytheactionoftheconsumeratthedirectrequestofthesystemoperator.This

typeofcontrolusuallyinvolveslarge-volumecommercialandindustrialconsumers.InterruptibleLoaddoesnotincludeDirectLoadControl.

LINE LOSS:Electricenergylostbecauseofthetransmissionofelectricity.Muchofthelossisthermalinnature.

LOAD (ELECTRIC):Theamountofelectricpowerdeliveredorrequiredatanyspecificpointorpointsonasystem.Therequirementoriginatesat

the energy-consuming equipment of the consumers.

LOAD CONTROL PROGRAM: A program in which the utility company offers a lower rate in return for having permission to turn off the air

conditioner or water heater for short periods of time by remote control. This control allows the utility to reduce peak demand.

OFF PEAK:Periodofrelativelylowsystemdemand.Theseperiodsoftenoccurindaily,weekly,andseasonalpatterns;theseoff-peakperiodsdiffer

for each individual electric utility.

ON PEAK:Periodsofrelativelyhighsystemdemand.Theseperiodsoftenoccurindaily,weekly,andseasonalpatterns;theseon-peakperiods

differ for each individual electric utility.

OUTAGE:Theperiodduringwhichageneratingunit,transmissionline,orotherfacilityisoutofservice.

glossARy (CONT’D)

42

43

PEAK DEMAND OR PEAK LOAD:Themaximumloadduringaspecifiedperiodoftime.

PEAKER PLANT OR PEAK LOAD PLANT:Aplantusuallyhousingold,low-efficiencysteamunits,gasturbines,diesels,orpumped-storage

hydroelectric equipment normally used during the peak-load periods.

PEAKING CAPACITY:Capacityofgeneratingequipmentnormallyreservedforoperationduringthehoursofhighestdaily,weekly,orseasonal

loads. Some generating equipment may be operated at certain times as peaking capacity and at other times to serve loads on an around-the-

clock basis.

RATE BASE:Thevalueofpropertyuponwhichautilityispermittedtoearnaspecifiedrateofreturnasestablishedbyaregulatoryauthority.The

rate base generally represents the value of property used by the utility in providing service and may be calculated by any one or a combination

ofthefollowingaccountingmethods:fairvalue,prudentinvestment,reproductioncost,ororiginalcost.Dependingonwhichmethodisused,the

ratebaseincludescash,workingcapital,materialsandsupplies,deductionsforaccumulatedprovisionsfordepreciation,contributionsinaidof

construction,customeradvancesforconstruction,accumulateddeferredincometaxes,andaccumulateddeferredinvestmenttaxcredits.

RATE CASE:Aproceeding,usuallybeforearegulatorycommission,involvingtheratestobechargedforapublicutilityservice.

RATE FEATURES:Specialrateschedulesortariffsofferedtocustomersbyelectricand/ornaturalgasutilities.

RATE OF RETURN: The ratio of net operating income earned by a utility is calculated as a percentage of its rate base.

RATE OF RETURN ON RATE BASE:Theratioofnetoperatingincomeearnedbyautility,calculatedasapercentageofitsratebase.

RATE SCHEDULE (ELECTRIC):Astatementofthefinancialtermsandconditionsgoverningaclassorclassesofutilityservicesprovidedtoa

customer. Approval of the schedule is given by the appropriate rate-making authority.

RATEMAKING AUTHORITY: Autilitycommission’slegalauthoritytofix,modify,approve,ordisapproveratesasdeterminedbythepowersgiven

thecommissionbyaStateorFederallegislature.

RATES:Theauthorizedchargesperunitorlevelofconsumptionforaspecifiedtimeperiodforanyoftheclassesofutilityservicesprovidedtoa

customer.

RELIABILITY (ELECTRIC SYSTEM): A measure of the ability of the system to continue operation while some lines or generators are out of service.

Reliabilitydealswiththeperformanceofthesystemunderstress.

RENEWABLE ENERGY RESOURCES: Energy resources that are naturally replenishing but flow-limited. They are virtually inexhaustible in duration

butlimitedintheamountofenergythatisavailableperunitoftime.Renewableenergyresourcesinclude:biomass,hydro,geothermal,solar,

wind,oceanthermal,waveaction,andtidalaction.

SOLAR ENERGY:Theradiantenergyofthesun,whichcanbeconvertedintootherformsofenergy,suchasheatorelectricity.

TARIFF: A published volume of rate schedules and general terms and conditions under which a product or service will be supplied.

THERMAL ENERGY STORAGE:Thestorageofheatenergyduringutilityoff-peaktimesatnight,foruseduringthenextdaywithoutincurring

daytime peak electric rates.

THERMAL LIMIT:Themaximumamountofpoweratransmissionlinecancarrywithoutsufferingheat-relateddeteriorationoflineequipment,

particularly conductors.

TIME-OF-DAY PRICING: A special electric rate feature under which the price per kilowatthour depends on the time of day.

TIME-OF-DAY RATE: The rate charged by an electric utility for service to various classes of customers. The rate reflects the different costs of

providing the service at different times of the day.

TRANSMISSION AND DISTRIBUTION LOSS:Electricenergylostduetothetransmissionanddistributionofelectricity.Muchofthelossis

thermal in nature.

TRANSMISSION (ELECTRIC) (VERB): The movement or transfer of electric energy over an interconnected group of lines and associated

equipment between points of supply and points at which it is transformed for delivery to consumers or is delivered to other electric systems.

Transmission is considered to end when the energy is transformed for distribution to the consumer.

UTILITY GENERATION: Generation by electric systems engaged in selling electric energy to the public.

UTILITY-SPONSORED CONSERVATION PROGRAM: Anyprogramsponsoredbyanelectricand/ornaturalgasutilitytoreviewequipmentand

constructionfeaturesinbuildingsandadviseonwaystoincreasetheenergyefficiencyofbuildings.Alsoincludedareutility-sponsoredprograms

toencouragetheuseofmoreenergy-efficientequipment.Includedareprogramstoimprovetheenergyefficiencyinthelightingsystemor

buildingequipmentorthethermalefficiencyofthebuildingshell.

WIND ENERGY:Kineticenergypresentinwindmotionthatcanbeconvertedtomechanicalenergyfordrivingpumps,mills,andelectricpower

generators.

www.energy.gov